Things To Check Before Buying A House

Whether you are a first home buyer or a property investor, there are many things you need to be aware of before buying a property.

However, with more than a thousand properties to choose from, what are the things that you need to check to make sure that your purchase decision is the right one?

Have you done enough research?

Founder of the Property Entrepreneurs Network, Kathryn Sands suggests that buyers visit websites, go to seminars, read books and talk to people, regardless of how much experience they have or may not have.

Full time mortgage broker and part time property investor, Tina Phamadds that new buyers should go to open houses and auctions, and actually speak to real estate agents to familiarise themselves with the buying process.

Pham also feels that there is a vast community of investors who are all sharing their experiences which can easily be accessed online. The experienced property investor however, warns that too much research is not always a good thing.

She says that at one point, buyers needs to pick themselves up and, “do it today, not tomorrow, not next week, do it now.”

Is it near your existing property?

Tony Hayek, CEO of Blue Wealth Property, thinks that this is one of the most important questions buyers should ask themselves. He reveals that most people feel comfortable buying properties near their primary residence or because they just “like” it, both of which are not good decisions.

He explains that any kind of property investment should not be based on emotion and that it should be a logical choice.

Sands also offers her experience saying that some people pick a house based on their parent’s opinions, not as a result of research. Unless it is a very good deal, she adds, it is probably not the right choice for you.

Is the property value accurate?

“Property Professor“, Peter Kouzilos explains that many people are “sucked in” by real estate marketers and property brokers. They see an exciting deal and they spring for it only to discover hidden fees and costs, and later learn that the property has very less growth potential.

Pham offers that buyers should first try to get a copy of the property report which can be done via RP data or propertyinvesting.com.au. This report will give you background information about the particular property, specifically about how long it has been on the market, if it was sold before and at what price, etc.

This gives you a better idea about the property price and ensures that you do not get confused by clever marketing.

How much property growth is there?

One of the most important things you need to consider before buying a property is its potential for growth. However, determining how a house will increase in value over the years can be difficult.

One tip from the “Property Professor” is to look at the land component of your purchase, and not the building component. The building is the depreciating asset and will require frequent maintenance, as compared to land whose value grows steadily upwards.

Blue Wealth Property itself has conducted research on factors that affect the property market. These include economic factors such as the level of infrastructure spending, supply and demand for housing, the demographics or the employment level.

Therefore before purchasing, you should assess the local economic factors of the area to get a good idea of how well your property will appreciate.

Where is the property located?

Kouzilos tells us that an easy way to see how well a property will do is its location, namely how far it is from the city and / or the sea. A great view also means that the property will be more attractive to potential buyers and will grow well. Tenants and buyers will also favour a property in close proximity to the CBD.

He also explains that recently a lot of previously rough, blue collar suburbs such as Richmond and St. Kilda in Melbourne have come up because of the short distance to the sea or the city. While you should not be a slave to trends, it doesn’t hurt to know which properties are on the rise.

Conversely, properties located in remote areas with minimal road access or even islands with only water access are unlikely to be popular in the real estate market. They can also be especially hard to finance if you are going for a home loan.

Does it fit your property investment strategy?

Kouzilos remarks that property investors should not buy a property unless it fits their long term goals. Whether you are looking to retire richer, supplement your income or earn enough so you can work part time or give up your day job, only the right property can take you that much closer to your goals.

Pham thinks that it is good to have a range of different properties instead of just investing in one type. She shares that in the past, she has bought units, subdivided vacant land into duplexes, renovated run down properties and sold them for a profit.

Pham also adds that your strategy can depend on where you are in the property investing cycle. Beginners are recommended to start small with units before they take on more risks while more experienced buyers will have a better idea of what to look for.

Do you need a home loan?

Sands informs us that before buying a property, you should first ask yourself if you are prepared to make the purchase.

Furthermore, Pham advises that home loan hopefuls find out exactly how much they can borrow first. She also adds that determining how much you can borrow can help narrow down the list of possible properties and help you make a better decision in the end.

Check with your personal accountant if you have enough money to make the purchase, or the right amount of deposit asked by the seller. If you are thinking of taking out a home loan, does your situation match the lender’s lending policies?

What should I do before investing in any property?

Figuring out the right property for your next purchase can be a difficult exercise, however if you ask yourself these questions before buying, you are more likely to make a better investment.

What questions do you ask yourself before taking the plunge? Do let us know.